Hunting for Calgary’s Missing M&A Deals

The first half of the year was marked by a decline in M&A in Canadian energy industries. Partner Scott Cochlan offered his opinion to a May 22 Financial Post article on strategies businesses are employing to weather a slowing market. Below is an excerpt of the article.

Talk to lawyers in the energy patch, and there appears to be unanimous agreement that there’s a disconnect in the marketplace. Would-be buyers don’t want to pay too much, while would-be vendors won’t sell for too little. Lest that seem like I’m stating the obvious, there seems to be more than the usual amount of stubbornness out there.

Target boards think they know the true market value of their companies, and they’re clinging to the valuations their companies reached during the height of the commodities boom, explains Will Osler of Bennett Jones LLP. “They can’t help but notice what their stock price was two years ago. That can be a real hurdle.”

“There’s a continual sense that if they can stick it out, now is perhaps not the time to sell,” adds Scott Cochlan of Torys LLP.

It is a tense waiting game. Canadian resource companies are having a tough time raising debt and equity through public offerings. The situation is particularly vexing at the junior end of the business. The tight market for capital makes it difficult to fund operations, organic growth, and expansion through M&A.